How Is Your CIBIL Score Calculated?

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CIBIL score is calculated by analyzing factors such as payment history, credit utilization, credit length, credit mix and recent credit inquiries. These elements are assigned specific weights, and their collective assessment determines an individual’s creditworthiness.

Maintaining a positive payment record and responsible credit management are crucial for a good CIBIL score.

Your CIBIL score is made up of four factors and each of them have a weightage.

Payment History	30%
Credit Exposure	25%
Credit Type and Duration/	25%
Other Factors	20%

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Your CIBIL score is made up of four factors and each of them have a weightage.

Payment History	30%
Credit Exposure	25%
Credit Type and Duration/	25%
Other Factors	20%

Check your Credit Score for Free

Payment HistoryPayment history is one of the biggest factors that can affect your CIBIL score in a positive or a negative way. If you pay your outstanding bills associated with your credit cards and loan EMIs on time, it will boost your score. And if you delay payments or miss payments, it will reduce your score. Hence, such payment behaviour should be avoided to keep your score high. A CIBIL analysis reported by the Financial Express reveled that a 30-days delinquency can reduce your CIBIL score by 100 points.
Credit ExposureCredit Exposure which is also known as the credit utilisaiton ratio is the second biggest factor that affects your CIBIL score. Credit utilisation ratio is the amount of credit used by you in proportion to your available credit limit. As per experts, you should ideally use up to 30% of your total credit card limit. A high credit utilisation ratio suggests you are credit hungry and are struggling with your finances. As a result of heavy credit usage on your credit cards, lenders could think that you are at a high risk of turning into a defaulter, leading to subsequent application rejection.
Credit Type and DurationHaving a long credit history suggests that you have experience in handling credit. Credit history refers to the number of years that have passed since you have opened your first credit account. Therefore, it is advised to start building credit history at an early stage as it comes in handy when you are planning to buy a house or a car in the future, requiring higher loan amounts.The type of credit is also considered while calculating your CIBIL score. It is important to maintain a healthy balance of secured (e.g. home/auto loan) loans as well as unsecured (e.g. credit card) loans. When you have secured as well as unsecured credit in your credit report, it suggests that you have good experience in handling both types of credit.
Other FactorsAnother factor that is a part of your CIBIL score calculation is hard inquiries. When you apply for credit such as a loan or a credit card, lenders pull out your CIBIL report from the credit bureau. Such an inquiry is called a hard inquiry and multiple such inquires will have a negative effect on your score. You should avoid applying for multiple lines of credit at the same time.

It should be noted that your CIBIL score is one of the factors considered by lenders while sanctioning your application. Therefore, you should take necessary measures to maintain a high credit score. At present, there are several lenders who offer preferential pricing to consumers who have a healthy CIBIL score. With a high score, you have the power to negotiate better deals on credit cards and request for lower interest rates for loans.

What is the Ideal CIBIL Score you Should Have?

CIBIL Score Range	Meaning
750 – 900	This shows that you have an exemplary credit history.It is easier for you to get a home loan, personal loan, credit cards and other unsecured loans with a credit score within this range.It also means that you have a consistency of frequent and timely repayments.
700 – 750	If CIBIL score range is within 700-750, it means that you have a great track record of making repayments on time.However, the banks will conduct some more credit analysis and this will be based on their internal credit policies.
550 – 700	This would mean that you have a few irregularities with your past payments.Banks may think that it is a little risky to give you a loan.A few banks may consider you eligible for a loan but they will ask for a high collateral and interest rate.
300 – 550	This means that you have a lot of defaults like past delinquencies, write offs, and also, over leverage. You will find it difficult to get a loan.

Ideal CIBIL Score Rating For Different Types of Loans

Loan	Ideal CIBIL Score
Personal loan	Above 700
Home Loan	Above 650
Loan against Property	Above 650
Car Loan	Above 700
Business Loan	Above 700
Gold Loan	Not Required

How to Remove my Name From CIBIL Defaulters’ List?

Here are the steps to remove your name from CIBIL defaulter’s list:

You should note that CIBIL will not publish a defaulters list.
However, if you are a defaulter, then this will be reflected on your CIBIL score and also your report.
A low score means that you will be less likely to get a loan approved from the banks and NBFCs. If a payment default or delayed payment has been marked in your report, then, this will affect your chances of getting a loan.